Yes, Peter Molyneux wants Fable 2 to make you feel loved. Videogames have been instilling fear in players for years, but rarely do they attempt to capture this more elusive and important of emotions. Here, in the role playing world of Albion, you can flirt with the opposite (or same) gender, get married and have sex. If the sex is unprotected - yes, there is a choice - you may have babies. If you choose a female avatar, you'll even get to experience the joys and pains of playing a pregnant action hero. No, we can't imagine what those might be either.
As they grow up, your children will adore and admire you so much that they'll end up looking and behaving a lot like you. If you're good, they'll follow in your heroic footsteps by taking out their school bully. If you're bad, they'll be the bully. And in a small gesture of their affection, they'll greet you enthusiastically every time you come home. Along those lines, townspeople will actually say "thank you" when you help them in some way.
Many of these features, however, were present in the first Fable...and they really make you feel more appreciated than loved. Therefore, the sequel is providing something completely new to care for you - a dog. The idea sounds ridiculously simple at first, but think about it. A dog is your devoted best friend. A dog would do anything to protect you. A dog's sole purpose in life is to love you, unconditionally. What better tool to make a player feel genuine emotion?
Your pet companion will have other purposes as well. He accompanies you on quests, bounding ahead on the path to guide your direction (partially replacing the mini-map), hunt for treasure and warn you of upcoming danger. He'll join you in overcoming that danger, too, attacking enemies autonomously. You can't control the dog directly, but he'll recognize that you've pulled out your long-range weapon and jump on the melee wielding monsters, or see that you're using your sword and go after the gun-wielding baddies instead.